My Turn: Alaska should act on identity theft

Posted: Wednesday, December 07, 2005

By STEVE CLEARY

Understandably the next legislative session will be dominated by gas pipeline negotiations. We hope that Alaskans will get the best deal possible from these negotiations, but legislators also need to keep up with other pressing issues.

One such issue is identity theft. Identity theft is the fastest growing crime in America, impacting someone every 78 seconds. Complaints to the Federal Trade Commission doubled last year. According to the Federal Trade Commission, 50 percent of victims, and there are 10 million each year, never find out how their information was compromised. The Alaska Legislature needs to take concrete actions to both protect Alaska consumers and stop identity thieves.

Unfortunately, identity theft victims shoulder the responsibility to clean up the aftermath of the crime, even if a corporation leaked their information. The average victim spends 600 hours and $1,500 clearing his or her name. Many victims pay more for or are denied credit due to the false accounts, and, some face the possibility of going to jail for the weekend due to the police mixing them up with the thief using their name.

AkPIRG is working to put consumers back in control of their personal financial information, to deter financial institutions from reckless business practices, and to give victims of identity theft recourse to clear their records and get back their good name.

Banks, credit card companies and other financial institutions are gathering more personal information on their customers than ever before - almost always without the customer's consent. Only California has enacted a law requiring strong consumer consent before sharing and selling these confidential dossiers, but the law is under threat of court repeal after a lawsuit by the banks, backed by their federal regulators.

Besides the funny commercials on TV, consumers know about identity theft from Choicepoint Inc. and the many other security leaks that have happened in the past year.

We only know about the ChoicePoint security breach because of a California law requiring businesses, nonprofits and state public institutions to notify consumers when their personal information has been compromised. Within months, a cascade of similar problems became public, including breaches of security at Bank of America, Citigroup, and even DSW Shoe Warehouse. All told at least 50 million Americans saw their financial security put at risk by sloppy practices at some of the nation's top financial institutions and retailers.

This year, security breach notification legislation was introduced in at least 35 states. As of November 2005, 21 more states have passed security breach notification laws. Alaska needs to take this common-sense step.

In an effort to prevent identity theft before it starts, a dozen states have already enacted security freeze laws, which give consumers control of who can look at their credit reports.

Identity thieves have taken advantage of a flaw in the credit granting process. Credit bureaus automatically issue a consumer's credit report to any creditor who asks for it. There's no good way under that old system to verify that the consumer who applied is you or your impostor.

Giving consumer's a security freeze changes that. Any consumer who is not currently seeking credit simply freezes his or her credit report to new creditors. If an identity thief applies for credit, no credit report can be issued. When that consumer wants to apply for credit, he or she can temporarily or permanently lift the freeze by using a secret password or PIN number.

In the beginning of 2005, only four states had state security freeze laws on the books. Since then, legislators in 27 states proposed security freeze bills, including California and Texas, where bills were filed to strengthen their existing security freeze laws. Alaska needs to join these states in protecting consumers.

With identity theft a growing problem here in Alaska, the legislature needs to put consumers back in control of their own financial DNA, and to impose strong notice rules on companies that lose information. Alaskans should demand a strong law from Juneau and tell our congressional delegation that any federal law should be stronger than those that states have already developed on their own.

 Steve Cleary is executive director of the Alaska Public Interest Research Group, or AKPIRG.